Overview

The Australian Securities and Investments Commission (ASIC) Class Order [CO 07/0123] was enacted in 2007 under the Corporations Act 2001 to extend the transitional relief for general insurance product issuers from the dollar disclosure requirements. This Class Order was introduced to provide certainty for general insurance providers and to prevent unreasonable compliance burdens while the government finalised specific regulations for dollar disclosure requirements for general insurance products. It is important to note that this relief does not extend to basic deposit products and related non-cash payment facilities, as regulation 7.9.07FA of the Corporations Regulations 2001 already exempts these from the need for product disclosure statements. The Class Order was made under the authority of subparagraph 1020F(1)(c) of the Act, which allows ASIC to declare that Part 7.9 applies to a person or financial product by omitting, modifying, or varying specified provisions. ASIC consulted with the Treasury and industry associations before making this Class Order, considering it to be of a minor and machinery nature.

Scope and Application

The Australian Securities and Investments Commission (ASIC) has made Class Order [CO 07/0123] under section 1020F(1)(c) of the Corporations Act 2001, extending the transitional relief for issuers of general insurance products from the dollar disclosure requirements. This Class Order modifies Class Order [CO 05/683], which initially provided transitional relief until 1 July 2006, and was subsequently extended until 31 March 2007 by Class Order [CO 06/476]. The purpose of [CO 07/0123] is to offer continued relief for general insurance providers, providing certainty and preventing unreasonable compliance burdens during the finalisation of specific regulations for dollar disclosure requirements for general insurance products by the Government. It does not extend the relief for basic deposit products and related non-cash payment facilities, as these are already covered by Corporations Regulations 2001. This Class Order applies solely to general insurance products and extends the relief until 30 June 2008, thereby maintaining the exemption from the dollar disclosure regime for a further 15 months. ASIC consulted with the Treasury and the relevant industry association before making this Class Order, considering its minor and machinery nature.

Key Provisions

The ASIC Class Order [CO 07/0123], made under section 1020F(1)(c) of the Corporations Act 2001, serves to extend the transitional relief for general insurance products from dollar disclosure requirements. This relief, which was initially granted by Class Order [CO 05/683] and later extended by Class Order [CO 06/476], is now further extended until 30 June 2008 under [CO 07/0123]. This means that general insurance providers are not required to comply with the dollar disclosure regime for their product disclosure statements during this period, providing them with additional time to adjust while the government finalises specific regulations for these products. Entities governed by [CO 07/0123], primarily general insurance providers, are required to ensure that they do not impose dollar disclosure requirements on their insurance products during the extended relief period. This obligation is intended to prevent unreasonable compliance burdens on these entities as they await the introduction of more specific regulatory requirements. The relief does not apply to basic deposit products and related non-cash payment facilities, as separate regulations have already been implemented to exempt these products from dollar disclosure requirements. Failure to comply with the provisions of [CO 07/0123] could result in regulatory action by ASIC. While specific penalties are not detailed in the Class Order itself, breaches of the Corporations Act or related regulations could lead to both civil and criminal penalties. Civil penalties can include substantial fines, and in some cases, criminal penalties may apply, potentially leading to imprisonment for individuals found guilty of serious breaches. Additionally, entities may face reputational damage and other commercial consequences from non-compliance. The explanatory statement clarifies that the Class Order was made following consultation with the Treasury and relevant industry associations. ASIC deemed more extensive consultation unnecessary due to the minor and machinery nature of the order. This indicates a streamlined approach to managing the transitional relief, ensuring that the regulatory burden on general insurance providers is minimised while awaiting the finalisation of more detailed regulatory requirements.